I recently came across an article I wrote some time ago for a client’s internal newsletter; I stand by (most of) what I said at the time…
The contents include a short article on skills and people management as well as information about upcoming public events at which I will be presenting. As always, questions, comments and more are welcome.
The Challenges of Managing a Growing Business
Managing a growing business presents unique challenges. In this article, I am referring to three case studies. These three businesses suffer from problems that originate in a very similar root cause. I could help them identify this with “organizational therapy”. The structure of the article is:
- General introduction to the context of the three businesses;
- Defining the common problem;
- The main problem and results for the three case studies;
- The principles of organizational therapy with which I could assist all three;
- A brief conclusion on the pains of managing a growing business.
Establishing the Context
I have recently been working with three growing business. In this article, I will name them by their initials, as these are handily A, B and C. They all three work in the interactive, web-based IT services, but function according to very different business models:
- A is an IT service provider. They deliver cloud storage and managed services. They support their clients to let them focus on their own business rather than managing their cloud and data needs. A team of professionals assures clients that their systems are updated and maintained.
- B is a software outsourcing business, developing and delivering web-based applications and websites on customer specifications. They have a number of teams designing, building and delivering websites and interactive online products.
- C has its own product, a niche market, but a market leader in their area, particularly in North America. Their team works with specialised, cutting-edge skills and deliver solutions that remain one step ahead of what their clients expect.
All three companies started up fairly recently (in the past ten years). All three are located in the same region in Central Europe.
All three companies are still being managed by the enthusiastic and extremely competent technical entrepreneurs who originally created the business.
All three companies are building high-quality products that have earned them an international market presence.
All three companies are self-aware enough to identify that they needed help in managing their growing business.
All three companies grew from a handful of people to a size at which structured management and skills are needed. All three suffered in different ways from their success and growth. This led them to contact me and ask me to come to help them understand and sort things out with them.
Defining the Problem
Entrepreneurs are typically technically savvy people with creative ideas. They understand how to build great products or deliver amazing services. They build their business and create something that works; with some marketing, they sell their product.
However, entrepreneurs are not natural managers. They create their business by doing everything, working all hours, designing, building, refining, updating, marketing, negotiating, selling, making the coffee… Once the business grows they find that they need to start hiring people. These new employees are expecting a job, a regular salary and “normal” working hours. A growing business means more management and more management skills.
- With more than twenty employees, entrepreneurs are no longer able to know what everyone is doing at any given moment.
- With more than fifty, they no longer know about the people in their business. They may know the faces and the names, but not much more than that.
- At a hundred employees, they don’t even know some people working for them. They see people in the office, who greet them by name, but they don’t know who are these person or what they do.
Now for bright technically competent self-starters, there comes a time when they must decide they need a professional CEO and hand over the reins. This is a difficult choice. I am suggesting they need to put their baby up for adoption -not a newborn child that they do not want or cannot afford, but one to whom they have given birth, nurtured, loved and watch grow up…
Rarely are entrepreneurs ready to manage a growing business.
The Individual Business Issues
Company A’s Vision
Company A had some teething problems, but the founder was rapidly turning from an entrepreneur into a businessman. He understood that he needed to hand over responsibility and authority in order to manage the business rather than developing the product. Of course, this was not an easy step to do, and he was still caught out publicly contradicting one of his directors. When you place someone in charge of a division of your business, you may not contradict that person in front of his or her team. Ever.
However, the main issue for company A was to clarify and deploy a vision and strategy for the company. As it had grown, different areas were starting to have a life of their own, and there was a risk for the company unity.
Over a couple of days with the management team, we drew up a business strategy and vision statement. The vision statement was the usual one-line BS feel-good statement – after all, we want something catchy that people can remember. But, more importantly, we drew up a “butterfly diagram” of the vision statement. This included a list of effects and changes that should be noticeable if the vision was implemented, and a list of risks, issues and impediments that would stop the vision from becoming reality.
From that, we could assign specific goals to all the key people to either remove, mitigate, reduce or avoid a specific risk or issue, or accelerate, facilitate or deploy one of the noticeable consequences of the vision.
This approach gave structure to the management team and help define their goals more clearly.
Company B’s Measurements
Company B had probably grown too fast, been too successful. As an outsourcing company, they had done what their clients required, giving them a wide range of expertise in a variety of technologies and tools, depending on what clients wanted. This meant that they had different teams working on different tools, using different methodologies… Rapid success allowed the founders to build the company largely on a reactive mode: they responded to client requests instead of leading and guiding them. The entrepreneurs who set up the business are still at the helm and coming to terms with the fact that they probably reached the point when they needed help to effectively manage the business. They also understood they were no longer up to date on the technologies being used.
Because of the reactive nature of the organization, they were lacking in a clear understanding of their own performance or productivity, even less of their actual quality. Most people, when I spoke to them said that they knew they were producing quality if clients did not complain. When speaking of “defect density” or “mean time between failures”, they had no clear understanding of what these meant. By introducing systematic measurements of the cost of quality, a better understanding of the key activities for continuous improvement would become possible. It will also help the marketing and sales side of this outsourcing business as they can prove the quality they deliver and justify the time and cost required to deliver high-quality and high-performance products.
Company C’s Organization
The management team of the third company understood that they needed to bring in professional management and they hired a new senior manager. However, differences of opinion at a personal level soon came to light between the entrepreneur and the new vice-president who came from a large corporate environment. One continued to intervene and change things at a micro-management level, the other tried to establish rigorous processes and controls. Many staff members reacted to this difference of opinion and frequently sided with one or the other. They considered the entrepreneur as a bully, or they considered the VP as too weak. Management must speak with a common voice (at least publicly) in a growing business.
In addition to badly defined roles and responsibilities, the lack of defined limits of authority of the senior people was the apparent key issue. A significant number of people expressed frustration at the confusion between who was responsible for what and the absence of limits to what a senior manager was allowed to do. Formalizing and standardizing this could solve this.
This involved clear definitions of roles, responsibilities and authority to ensure that people their role and position in the company. It also led to the creation of separate teams that worked, according to Agile-Scrum principles to be able to rapidly deliver upgrades to their standard product. In addition to this, the recommendation was that the roles, responsibilities and authority should be defined using a table of skills and competencies similar to that proposed by SFIA.
The approach taken in these three businesses was based on what I have been calling “organizational therapy“.
This is a process through which I proceed through a series of interviews, starting with senior management and moving through the various layers of the business up to the people doing the “real work”, those who are actually building the product and delivering the services, the “factory floor”.
In most businesses (and I have been an international consultant for over twenty years, and an employee in a number of companies for over forty years) The disconnect between management and team members is found to be the main issue regarding quality and performance. You expect this in large multinationals, with a distant executive team on the top floor and 15 layers of middle management. However, you need to recognize it in small and young companies where the director is known and accessible to all members of staff.
Small companies, start-up companies are frequently run by an entrepreneur who has too much power. It is difficult for them to understand that things have moved on and that some form of formal, structured management is now required in a growing business.
By communicating the failures caused by the absence of structure to the management team, I help them understand the urgency, but, as long as they do not see the frustrations of those people that the form the base of the business, the ones who are actually producing what your clients want, they probably do not really understand the problem, let alone acknowledge their own limitations.
Entrepreneurs are usually great at the creation of businesses, products and services; they are rarely suited to manage a growing business. An entrepreneur wants to be involved and know everything that is going on in the business; a manager needs to be able to step back. The three breaking points at which an entrepreneur can expect to lose control are when you get more than 20, 50 and 100 employees. At those points, the whole culture changes. When there is a probability of reaching one of these breaking points, it is important to be prepared. Communication, processes and metrics, reporting structures need to be designed and defined. If you let them evolve organically, they are likely to be wrong.
These problems can be resolved with an independent, confidential discussion with employees. The conclusions of which are redacted and reported.
Change is important, pragmatic improvement is critical.
I was recently requested to give a short talk at the launch of “Today Software Magazine” in Cluj (Romania). As this was very much at the last minute, I did not have the time to prepare my talk as much as I would normally do. However, I am happy to share it.
As a new year starts, it seems that (nearly?) all journalists are busy making their forecasts for the future. Of course, at the end of the year, we may be given the opportunity to look back at their predictions and see how wrong they are. They are currently predicting that President Trump will not last the year, or that he will last but not get reelected next year, or that he will get reelected, or that he will be in prison, or that he will stand down in exchange of amnesty, or just about anything else. As we listen to these predictions, we must think to ourselves that these journalists don’t really know or believe themselves what they are saying – it is mostly making predictions based on personal desires or fears…
And yet, in business, we believe that all estimates need to be contractually binding, transformed into deadlines, with penalties for “non compliance” should a delivery be a day late. I have already written about estimating problems, so I will not return to that topic.
However, I do want to remind you that an estimate, ultimately, is just guesswork. Perhaps you have a lot of data to demonstrate that, in the past, this was how long something took; perhaps you have done a statistical analysis and can show root causes of variations, but it is still, in the end, just a guess.
When requesting an estimate from someone, you should always ask for a confidence level. I tend to recommend an estimate to be provided in the form of an S-curve:
This approach allows you to say that you will only feel 100% comfortable if you are given at least x (in this picture, 703 days) to complete the project. If you want to negotiate down to 500 days, I feel 80% comfortable that we can deliver; if you are willing to take the risk, we can work together.
A consequence of this is that, as I have frequently said:
- an estimate should never be translated into a deadline;
- always make sure that you are clear why you are asking this and what you plan on doing with that estimate.
Language is tricky. If you request an estimate, a forecast or a prognosis, you may get very different data depending on how people interpret that word. If you request a projection, an evaluation, an assessment or an opinion, who knows what you might get in return.
But remember, ultimately, it’s just a guess.
In November 2018, I gave the following talk at the IT Days Conference in Cluj (Romania), organised by “Today Software Magazine”.
I was recently asked to deliver a brief presentation on communication tips for a business networking breakfast in Milton Keynes. As I received positive feedback, I decided to change this into a post here. This post includes most of what I said and some additional bits that I meant to say or should have said.
I don’t know what your job or role might be as you read this, you may be the CEO of a major multi-national, or a sole trader struggling to make ends meet. What I do know is that your business is a quality business, a business that depends solely on delivering Quality. Whatever product or service you are selling, I can find somewhere else, probably cheaper.
You are in a global market, with a global client base and global competition. Even in something apparently as local as a personal trainer must compete on the global stage with companies advertising miracle cures on the internet.
Now, you may define Quality any way you want. You may decide that you want to be the cheapest in the world or the first on the market and that’s all right, that’s your definition of Quality. You may define Quality as the delivery of such high standard products that you cannot possibly justify the useless expense of a customer service desk – unreasonable perhaps, but a valid goal.
Define what Quality means to you, what is your Quality, your uniqueness, your brand.
Once you understand your concept of Quality, you need to accept that your Quality depends entirely on people. Not on technology, processes, seals of approval, audits, standards or anything else: all these are only valid as tools to help your people do their work well, efficiently and effectively. And Quality, in the eyes of these people, is entirely dependent on your communication. It is a shame that we do not learn basics of communication; we learn to talk, we learn to speak, but we don’t learn to communicate.
First principle: communication depends on reception. If no one is listening, if no one is hearing, if no one is understanding, you are not communicating. You may be speaking, but you are not communicating.
A few general principles on communication:
- First, know your audience: to whom are you communicating. If you are communicating to a small group of people you have known for a long-time, you will speak very differently than if you are in front of a theatre full of strangers.
- In order to understand your audience, if you are in an organisation, you need clear job descriptions, including roles and responsibilities. I am a big fan of SFIA, which while being mainly focused on the IT industry, is very good at identifying responsibilities and roles based on skills and aptitudes; respect those roles and don’t publicly over-rule your team leaders.
- Respect the lines of command: as managing director, never publicly contradict a department head in front of her/his reports.
- Use clear language in your communication, as often as possible, use numbers to explain what you want people to do – this works for yourself as well: rather than saying that “I want to make more time to read books next year”, consider “I am going to read at least one professional book and what leisure book per month in the coming 12 months”. Now you have a goal against which you can measure progress and results. Use data in communicating goals and objectives and make sure that they are achievable.
- Always speak the truth. It does not help when managers believe they have to always be optimistic about the future, tell the staff how business is booming and expanding and, even though we have had a couple of setbacks, the profits are rising, when everyone knows they have just lost their biggest client. Next month, when they lay off half a dozen people, they will have killed off any trust that the team members ever had in then.
- As part of your communication, your team members want consistency and continuity. If you are announcing new goals and strategies every six months, no one will listen: wait a while, we are about to go the other way. It is all right to change strategies from time to time when they fail, but learn your lessons from the failure and don’t keep on having to change everything.
- Encourage team members to challenge you, dissenters and cynics are the people who will make your business more effective. Reward people for bringing bad news and risks to your attention; listen to those telling you what you are doing wrong – too often employees are afraid to speak truth to power.
- Avoid saying “should” or “could” when you mean “must”
- When speaking to your clients or prospects, be realistic: don’t promise the impossible. Again, if you cannot deliver on your promises, you will lose their trust. The two biggest sources of business, the two most powerful tools of marketing are word-of-mouth recommendations and customer retention.
- For many years now, we have been promoting the concept that “the customer is always right” (which is not true); this has led to the understanding that you need to say what you think your clients want to hear. Don’t pre-judge them, don’t have the arrogance to presume you know what they want to hear – listen to them and be honest. Sooner or later they will discover that you cannot satisfy the promises you made and will lose trust in anything else you may say.
- When speaking to clients, use data and clear language instead of empty promises. You cannot promise me that your marketing campaign will increase my customer base by 15%, realistically, you can only promise that you will do your best, use appropriate analytical and statistical data to make it more likely that more people will come across my name. What you can promise me is that you will put my name in front of 25000 people who may or may not be interested, but fit our current understanding of the key demographic. Of these, we can expect that between 2 and 2.5% will follow through and have a look at my website. That is realistic and verifiable. You can commit to that and we can both verify the numbers afterwards.
- In public speaking, a few additional rules come into play:
- Your audience will only remember three things of what you say, you need to decide what are the three key messages you want to communicate, then tell them three times the same thing without appearing to repeat yourself. This is the challenge.
- Never turn your presentation (or indeed your article) into self-promotion: give them something solid to take away, give them facts, something by which to remember you.
- When addressing a group, you are probably selling yourself, but don’t over-sell: tell the truth, back up your facts with data – but don’t overwhelm them with loads of statistics, just a few that are particularly telling.
- Build your presentation around a story, make it personal, tell them about yourself, include anecdotes.
- Speak slowly: it gives time for your audience to process what you are saying and it gives time for you to think while speaking – if you speak to quickly, you will need an “humm” for your thoughts to catch up, and this gives the feeling you don’t know what you are talking about.
- Beware of humour: most jokes will offend someone, a golden rule is to start with something safe, I usually try to mock myself rather than risk upsetting potential future clients. Humour is critically important, and I would strongly recommend making them laugh early in your talk so as to make them pay attention to the rest, but make sure that you are not saying something that will be offensive to (sections of) your audience.
- Words are meant to be spoken, PowerPoint slides are meant to illustrate and support what you are saying, not repeat it: don’t read your slides, don’t have your words on the slide. Use pictures and graphics whenever possible to illustrate what you are saying.
- And finally, learn to finish on time.
I hope that some of these are useful to you, please feel free to comment, whether it is to correct something I have said
I have been going to Cluj-Napoca for a dozen years as a consultant and as a speaker at a number of conferences. This week I had the pleasure of being there again and delivering a keynote presentation on “Managing Complexity and Chaos in the Workplace” at IT Days 2018.
There were apparently 800 people written in to the conference, but that includes people working at sponsor stands and some who don’t show – it is still a lot of attendants for a town that size. If you do not know Cluj, it is the capital of Transylvania and a town that is heavily dominated by the software industry (I know, Transylvania and pale, pasty people… the jokes are too easy to write). Because of the relatively recent impact of 40 years of communist dictatorship, the IT community here is young, vibrant and eager – eager to learn, eager to improve, eager to do, eager never to fall back into the levels of utter poverty in which their parents lived.
Of course, at a conference like this, most of the talks are either technology based or in Romanian, so I admit I did not understand everything. After so many years working in the software industry, I should know more, but as time goes by, I know less and less about programming and the languages used. However, it is important to participate in conferences like this, and to listen to what people are saying whenever possible. This is where the future is coming to life. I do know that all the speakers have strict instructions to explain how wonderful their company is and only show good things, in the hope of maybe picking up a client or a new employee. As a consequence, they are promoting new technologies, new solutions, practical ways of implementing old solutions, etc. The jargon filters through these conferences and becomes common speech. In my job, I listen to people, I try to understand what are their problems are and so it is important to understand that jargon.
While I will not create a list of the talks and topics, whether I attended them or not (as there were 4 parallel tracks, I could not listen to everything, and certainly did not understand many of them), I did want to give a salute to the introduction by the mayor of Cluj. It is not often that I hear a politician or a business leader giving such a clear vision for the future. There were some points on which I would have like to challenge him, of course, but in general he appears to have understood the key problems of the town and is tackling them, starting with the main pain-points through infrastructure, development and collaboration between the city, the people, the businesses and others.
My talk was an introduction to complexity and chaos, and the Cynefin framework. It was well received and I was answering questions for some two hours afterwards – more to do with my work in communication and culture than with the framework. The presentation was filmed and will be put online in the coming weeks or months.
I also got to hear a presentation given by Sir John Dermot Turing, the nephew of Alan Turing (yes, I live in Bletchley and went all the way to Romania to hear a talk about the luminary of Bletchley Park). A fascinating talk in which Sir John demonstrated his competence not only on his uncle’s life but also relater to the research he has done on artificial intelligence and the evolution of computing.
It is always a pleasure to be able to attend a well organised conference, and an honour to be asked to give a keynote talk. Add to this the pleasure of meeting a lot of intelligent people who are eager to learn and it was a very good couple of days, indeed.
For as long as I can remember, engineers, software developers, managers and sales people have missed their deadlines on a regular basis. This is a problem that has simple causes and possible solutions, but it requires a level of awareness that we appear to be missing in most of our endeavours. When there is variation between estimates, plans and actuals, generally:
- there is over-run, meaning the actuals are greater than the estimates and plans;
- the actuals are blamed and people are challenged as to why they did not meet their targets.
Frequently, the blame needs to lie on the estimating and planning rather than on the performance against the plan. It is time we took estimating seriously and started building appropriate risk management into our plans.
One of the first reasons for bad estimating is the language problem. If you ask for an estimate, a forecast, a prognosis, a guess, a projection, a ball-park figure, a guess or any other variation thereof, you have (maybe) a clear idea of what you want and why you want it. Are you certain that the person to whom you are asking has the same understanding?
Every estimate is just a guess. Maybe the person doing the guess has a lot of experience, and has considered many options and weighed the probabilities, but, in the end, it comes down to a guess – no matter how “educated” that guess may be; in the end the value they give is probably wrong.
Data vs Experience
Obviously, we trust the expert, the person with the most experience, to make the estimate. However, we are not selecting the person who is best skilled at estimating, but the one who has done the job most frequently. The fact that the person in question has under-estimated the time it would take systematically for the past ten years, we will still trust them because they have done this so often.
One of the first steps that the expert will take is to estimate how long it would take her to do the job; once the agreement is finalized, the expert will be moved on to the next contract that requires estimating and the work itself will be given to someone else: the effort has been estimated for someone with twenty years experience, then given to someone with twenty minutes experience and we wonder why it is not completed on time.
The estimate, once it has been produce should be reviewed and corrected. Many managers (and less competent sales people) focus on cutting the estimate down: “why do you say this will take 6 months? We will lose the contract if we say 6 months, let’s change this to 4 months total”.
The intelligent manager (and the sales people who respect their clients) will review the estimate and find out what is missing, what are the risks that have not been taken into account, what is the worst case scenario and how can it be covered, how can I be sure that I am going to satisfy my client? Have you taken into account the average number of sick days in the team?…
Milestones and Commitments
So, you asked me how long do I think this will take and I said “probably not much more than a month”. Now, you have come back with detailed requirements and expectations that were not available when you asked the question and demand that I respect my previous “commitment” to finalize this work within one month, twenty working days. This does not take into account the work I am already doing, or the fact that your vague idea did not include all the additional bits of work you added into the requirements.
Milestones and commitments are necessary, but the order in which things happen need to be clearly understood:
- Document the requirements in as much detail as possible
- Establish the major milestones and include them in the requirements
- Ask for an estimate as to what would be the cost and probability of success to deliver the work completed within the milestones set out
- Make an estimate and negotiate the result: let’s eliminate some of the less critical requirements, move the milestones to make it more realistic, etc.
- Build a plan as to how the work will be done and the proposed final set of milestones
- Negotiate and move around more if necessary
- Make a commitment to respect the milestones.
It is folly or cruelty to request an estimate and transform it into milestones.
Monitoring the work being done on a continual* basis means that you can evaluate in real time the amount of work remaining. If the first three phases of your project over-ran by 20%, you need to stop believing you will complete on time: chances are your whole project will be 20% late.
Burndown charts, Gantt charts and others are traditional methods. If used correctly they are useful in monitoring progress; however if you don’t use your previous estimating errors to correct your future estimates, you will just keep on “snowplowing” more work against a fixed deadline.
*Continual means without interruption, all the time; Continuous means ongoing. You can continuously improve your work practices by rolling out an improvement every few months, you cannot continually improve work practices as that would confuse the workforce with hourly changes to methodologies and processes.
If your team is not delivering to estimates, it is probably because they / you are not as good at estimating as you believe. Don’t pressure them to work faster, that will only create more problems, give them appropriate training and support in making better estimates and understanding how to use data.